NerdWallet has launched an initiative to drive deposits into credit unions that serve underrepresented communities. There are huge inequities in these communities, and many traditional financial resources are either unavailable to them or come with predatory fees and interest rates attached.
As a part of my series about “Big Ideas That Might Change The World In The Next Few Years”, I had the pleasure of interviewing Tim Chen.
Tim Chen, CEO of NerdWallet, co-founded the personal finance company in 2009 after working on Wall Street and realizing there was a need to give consumers better clarity around all of life’s financial decisions. Before founding NerdWallet, Tim was a hedge fund analyst at Perry Capital investing in payment processing firms, credit card networks and technology companies. He also worked as an equity analyst at Credit Suisse First Boston. Tim has a bachelor’s degree in economics from Stanford University.
Thank you so much for doing this with us! Before we dig in, our readers would like to get to know you a bit. Can you please tell us a story about what brought you to this specific career path?
Around 2008 my sister came to me for advice on choosing her next credit card. I had previously worked on Wall Street so I thought this would be an easy task, but I was shocked at the results of a quick Google search: There were too many options to sift through and no easy way to do a side-by-side comparison of the features and benefits of each. When the spreadsheet that I made her started to go viral, I realized that consumers were in desperate need of unbiased financial advice and easy tools to help them make financial decisions confidently. So I created NerdWallet in 2009 to be that resource for all of life’s financial decisions.
Ok thank you for that. Let’s now move to the main focus of our interview. Can you tell us about your “Big Idea That Might Change The World”?
NerdWallet has launched an initiative to drive deposits into credit unions that serve underrepresented communities. There are huge inequities in these communities, and many traditional financial resources are either unavailable to them or come with predatory fees and interest rates attached.
Companies of all sizes can help address this inequity by simply banking their dollars with a credit union that serves low-income communities rather than a traditional bank. In doing so, companies can help fund loans for people in underserved communities who want to start a business, buy a home, or need to pay for an emergency expense, but may not have strong credit or cash in their pockets. By providing safe and fair lending options to these groups, these credit unions are helping create long-term, sustainable wealth in these communities, which is critically important during the post-pandemic economic recovery and beyond.
At NerdWallet, we’ve moved $2 million into Self-Help Federal Credit Union, which serves low-income working families in California, Washington, Illinois, and Wisconsin. It’s inspiring to see the impact credit unions like Self-Help have had on individuals and the larger community. For example, Self-Help Federal Credit Union provided funding support to Brighter Beginnings, a San Francisco-based organization that aims to support healthy births and successful development of children in communities with limited resources. With Self-Help’s support, Brighter Beginnings is able to give back to its community by helping parents who have limited financial, support and medical resources become self-sufficient so they can raise happy, healthy children.
To encourage like-minded companies to join the cause, we’ve partnered with Inclusiv, a nonprofit network of community development credit unions, to help interested companies find credit unions across the country who are accepting deposits. We’re also directing additional funds into three credit unions supporting underserved communities in the Bay Area, all of which are minority depository institutions: Self-Help Federal Credit Union, Northeast Community Federal Credit Union, and Cooperative Center Federal Credit Union. Our employees are also getting involved through volunteer and skill-based opportunities in our local community.
How do you think this will change the world?
Inclusiv and its CDCU partners are on the frontline of economic recovery, helping not just individual families and local small businesses, but also underserved communities as a whole by helping to increase cash flow and create new jobs. We’re already seeing these credit unions make a huge impact. In 2019 Self-Help helped finance the opening of Community Foods Market, the first full-service grocery store in West Oakland in over 50 years. West Oakland was once a food desert, but now it has a local grocery store that creates new job opportunities and allows residents to spend their grocery dollars in their own community.
At the same time, according to the S&P Global Ratings, U.S. corporations are sitting on $2.5 trillion in cash and investments — money that could be funding communities in need, but is instead sitting in traditional bank accounts. If more companies, not just those with a lot of cash on hand, redirected portions of their capital into credit unions serving low income communities, we could make incredible strides in supporting underrepresented communities.
Keeping “Black Mirror” and the “Law of Unintended Consequences” in mind, can you see any potential drawbacks about this idea that people should think more deeply about?
No. That’s what makes this such a smart, easy decision. Companies can get competitive rates, asset preservation, and quick ratio maintenance all while making a positive impact on communities in need. It’s a win-win.
Was there a “tipping point” that led you to this idea? Can you tell us that story?
NerdWallet’s mission is to help people make financial decisions confidently and we’ve long wanted to find ways to further that mission outside of the products we provide. During last summer’s important conversations surrounding racial equity, our employees became passionate about finding ways to give back to Black, Indigenous, people of color (BIPOC) and other underrepresented communities in a way that aligns authentically with our corporate mission. So I reconnected with a colleague from Self-Help Credit Union, which is a local credit union in the Oakland area, who had served on the Consumer Financial Protection Bureau with me years ago. Through those conversations, we began thinking through the best ways to support Self-Help, as well as other credit unions with a similar mission.
What do you need to lead this idea to widespread adoption?
Awareness. At NerdWallet we help people make smart money moves that they didn’t know were an option. We’re doing the same thing with this initiative, but on a larger scale. There are so many corporate decision makers who aren’t aware that their companies could be giving back just by moving their money from one place to another. But once the awareness is there,
I believe it’s a very easy decision. We’re hoping that as we spread that message and share the amazing impact stories, more companies will jump on board and follow suit.
How can our readers follow you on social media?
They can connect with me on LinkedIn here.
Thank you so much for joining us. This was very inspirational.
Thank you for including me!
NerdWallet CEO Tim Chen’s Big Idea That Might Change The World was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.
